New inflation figures have confused Iranian households.
According to the Central Bank of Iran, the Consumer Price Index increased by almost 70% [68.7%] in the month ending April 20 [compared to the similar period of last year]. In addition, the Majlis Research Center, the research arm of the Iranian Parliament, reported that based on opinion polls, inflationary perception in Iran is over 80% and at times hovers in three-digit territory. Inflationary perception and inflation are two different concepts, Hadi Haqshenas, an economist, prefaced his write-up for the Persian daily Ta’adol with this note. A translation of the text follows:
CBI calculates the inflation rate based on data it gathers from 75 cities while the Statistical Center of Iran calculated CPI based on data gathered from both cities and villages. Both of them announce a single figure for the whole country.
The 50% inflation [annualized] reported by SCI for the month ending May 21 has two different meanings for residents of urban and rural areas. In other words, in a country the size of Iran, one single figure on inflation cannot reflect all the economic realities.
In Tehran, the average housing rent is 2.5 million rials per square meter, i.e., a 100-meter unit is rented out at a monthly average of 250 million rials. This is while the minimum wage of workers and the average salary of government employees and pensioners are below 150 million rials; naturally a worker or retiree cannot afford to pay this sum. It is normal for an individual to have multiple jobs, or have more than one person working in a household. The rents in small towns are much lower.
Housing rents and food account for two-thirds of the households’ budget. Therefore, a family that does not pay housing expenses can consume more calories and vice-versa.
The same example can apply to different careers. Inflation does not create trouble for physicians, engineers and lawyers whose incomes match the current economic situation and inflation rate, but the same rate puts pressure on most Iranian families who have a fixed salary that is lower than the average rate. Therefore, inflation is perceived differently by different income deciles and whether they are living in big cities or small towns.
Even different geographical and climatic conditions create different perceptions of inflation. Wages have not increased according to the average inflation of 40% of the past five years; people from the middle deciles have also fallen into the deprived deciles and inflation has had a bigger impact on their lives.
On the other hand, the inflation rate’s impact is much less for the privileged deciles. These propositions can be extended to the geography and different income groups of the country. Therefore, inflation and inflationary perception should be weighed as two separate concepts.
For some groups, the rate of inflation and its impact are very high and for others, inflationary perception is minimal and they basically do not feel it at all.
This is a gap that has given rise to various contradictions on both sides, which have inflicted huge losses on low-income families.
